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The 
Art  of  Wise  Investing 


THE       ART       OF 
WISE     INVESTING 


A  SERIES  OF  SHORT  ARTICLES 
ON  INVESTMENT  VALUES, 
POINTING  OUT  THE  ESSENTIAL 
CHARACTERISTICS  OF  SAFE 
INVESTMENT  SECURITIES,  WITH 
A  REVIEW  OF  THE  FINANCIAL 
PITFALLS  INTO  WHICH 
SUPERFICIAL  EXAMINATION 
INEVITABLY        LEADS 


PUBLISHED    BY 


MOODY   PUBLISHING   CO. 

35     NASSAU     STREET,      NEW     YORK 
OF  THE 


UNIVER»*TY 


^ 


COPYRIGHT,     1904,    BY 

MOODY     PUBLISHING     CO. 

Niw  York 


R  A 
"or  THE 

UNIVERSITY 

PREFACE    V^LiFOHa^ 

While  the  popular  impression  is  probably 
the  reverse,  yet  it  is  an  undeniable  fact  that 
a  far  vaster  sum  of  money  is  annually  lost 
in  this  country  through  unwise  investment, 
than  through  pure  speculation.  While  many 
fortunes  are  constantly  jeopardized  and  dis- 
sipated through  what  is  known  as  specula- 
tion in  stocks,  bonds,  grain-futures  and  like 
ventures,  yet  the  many  sums,  large  and 
small,  which  annually  leave  the  pockets  of 
actual  investors  are  far  greater  in  amount. 
Indeed,  I  would  almost  say  that  the  losses 
through  ^^unwise  investments^  are  easily  ten- 
fold the  losses  occasioned  through  mere 
speculation  on  the  exchanges. 


140645 


vi  Preface 

And  furthermore,  the  losses  incurred 
through  unwise  investing  are  far  more  im- 
portant to  the  community  at  large;  for  while 
speculative  losses  are  in  a  sense  anticipated, 
or  at  least  partly  anticipated,  the  losses 
through  mistaken  investments  are  usually 
unexpected  and  unprepared  for.  Specula- 
tive losses  often  represent  the  loss  of  money 
easily  gained,  either  through  former  specu- 
lation or  from  other  sources,  but  the  aver- 
age loss  of  the  investing  public  is  generally 
a  loss  of  hard-earned  or  industriously  ac- 
cumulated savings;  and  therefore  such 
losses  are  felt  far  more  deeply  by  the  com- 
munity. 

The  art  of  wise  investing  involves  two 
primary  motives.  The  first  is  to  place  one^s 
principal  where  it  will  be  entirely  secure. 


Preface  vii 

and  the  second,  to  gain  as  large  a  per- 
centage of  return  as  possible  without  in  the 
least  disturbing  or  lessening  the  security  of 
the  principal.  The  moment  the  status  of 
the  principal  is  changed  for  the  purpose 
of  enhancing  the  rate  of  return,  the  trans- 
action ceases  to  be  a  pure  investment  and 
becomes  more  or  less  of  a  speculation. 
Thus,  analyzed  in  its  simplest  form,  we  may 
put  it  down  as  axiomatic  that  only  those  are 
legitimate  investments  where  the  primary 
motive  is  the  safe  securing  of  one^s  prin- 
cipal and  the  rate  of  return  thereon  is 
looked  upon  as  secondary.  A  speculation, 
on  the  other  hand,  is  where  the  desire  for 
large  profit  is  so  strong  that  the  safety  of 
the  principal  becomes  in  effect  a  minor  con- 
sideration.    That  is  to  say,  the  person  in- 


viii  Preface 

vesting  or  speculating  may  regard  his  prin- 
cipal as  secure  but  is  willing  to  place  it  at 
considerable  risk  in  order  to  increase  his 
profit.  The  securing  of  the  principal,  there- 
fore, is  the  first  and  chief  matter  to  be  con- 
sidered in  investing  money. 

Looked  upon  in  this  light  it  will  be  seen 
that  the  matter  of  investing  money  wisely 
is  a  most  important  as  well  as  a  most  difii- 
cult  art,  and  therefore  well  worthy  of  care- 
ful examination.  The  ideas  and  opinions 
expressed  in  the  following  pages  are  the 
concrete  result  of  many  years^  experience 
and  study  of  Wall  Street  conditions  and 
methods;  and  while  it  may  appear  to  some 
that  the  writer  is  too  conservative  in  his 
attitude  towards  investing  methods  in  gen- 
eral, yet  careful  thought  should  convince 


Preface  ix 

every  reader  that  it  is  the  part  of  safety  and 
prudence  to  be  securely  on  the  side  of  con- 
servatism in  Wall  Street  investing,  rather 
than  the  reverse. 

In  the  work  of  compilation  the  valuable 
co-operation  of  Mr.  John  P.  Hume,  author 
of  a  book,  now  out  of  print,  entitled  "The 
Art  of  Investing,^^  is  hereby  publicly  ac- 
knowledged. 


CONTENTS 


Preface      -----  y 
The  Art  of  Wise  Investing 

I >3 

n 53 

III 8i 


The  Art  of  Wise   Investing 


Unless  he  has  had  much  previous  ex- 
perience, the  prospective  investor  who 
wishes  to  put  his  money  to  work  through 
Wall  Street  channels,  will  be  confronted  at 
the  very  outset  with  the  question  of 
"safety/^  Ejiowing  only  more  or  less 
definitely,  that  he  ought  not  expect  a  return 
of  more  than  4  per  cent,  to  5  per  cent,  if  he 
expects  to  place  his  money  securely,  he 
naturally  seeks  more  expert  advice  from 
a  banker,  broker  or  other  dealer  in  invest- 
ment securities.     And  he  is  wise  in  doing 

13 


14  THE   AET   OP 

this,  provided  he  exercises  good  judgment 
in  the  selection.  But  brokers  and  dealers 
in  investment  securities  are,  of  course,  not 
infallible;  their  judgment  is  sometimes 
biased,  and  they  -may,  for  one  reason  or 
other,  give  unsound  advice.  Hence  it  is  all 
the  more  necessary  that  the  investor  should 
inform  himself  regarding  the  merits  of  a 
given  security,  as  well  as  train  himself  in 
the  art  of  analyzing  investments  in  general. 
The  truth  is  that  while  there  are  certain 
fixed  rules  for  proper  guidance,  yet  every 
bond  must  be  judged  by  itself  in  order  to 
be  analyzed  aright.  For  instance,  a  man 
may  be  advised  to  invest  only  in  ^^first  mort- 
gages,^^ and  by  putting  this  limitation  upon 
his  field  of  investment,  thereby  insure  its 
safety.     But  such  advice,  applied  broadly. 


WISE  INVESTING  15 

is  essentially  unsound.  A  fourth,  fifth  or 
tenth  mortgage  on  some  properties  may  be 
far  more  secure  than  a  first  mortgage  on 
others.  For  instance,  the  Eeading  Company 
4s,  selling  at  100,  are  a  much  safer  security 
than  were  the  first  mortgage  bonds  of  the 
Centralia  &  Chester  R.  E.,  and  yet  the  for- 
mer are  an  8th  mortgage  on  parts  of  the 
mainline  of  the  Eeading  system  and  are  a 
first  mortgage  on  no  part  of  the  property. 
Yet  they  are  well  secured,  while  the  other 
bond  defaulted  early  in  its  life  and  its  holders 
were  obliged  to  sacrifice  a  large  part  of  their 
principal  in  the  re-organization  which  fol- 
lowed the  default.  Thus  it  will  be  seen 
that  to  advise  the  investor  merely  to  con- 
fine his  investments  to  first  mortgages  may 
be  most  misleading.    And  yet  manv  of  the 


16  THE  AET   OF 

victims  of  such  results  never  seem  to  grow 
any  wiser. 

Another  unsafe  method  of  judging  the 
safety  of  bonds,  is  to  assume  that  because 
they  are  secured  on  part  of  a  large  railroad 
system  and  ^^underlie^^  one  or  more  issues 
of  secondary  bonds,  that  their  security  is 
absolutely  assured.  This,  like  the  former 
argument,  contains  some  vital  flaws,  and 
while  it  holds  good  in  the  majority  of 
instances,  if  followed  in  others,  brings 
very  disastrous  results.  Many  large  and 
important  railroad  corporations  absorb 
tributary  or  competing  lines  under  one  plan 
or  another,  but  they  do  not  always  guar- 
antee the  securities  of  these  lines.  Bond 
issues  are  ^^assumed,^^  according  to  the 
statements  circulated,  but  unless  they  have 


WISE  INVES 


been  specifically  guaranteed  by  the  acquir- 
ing corporation,  it  does  not  necessarily  fol- 
low that  the  credit  of  the  latter  is  back  of 
the  security  at  all.  The  acquired  line  may 
turn  out  an  unprofitable  and  losing  in- 
vestment, with  the  result  that  the  larger  or 
controlling  line  will  want  to  either  unload 
its  burden  or  scale  down  the  obligations  of 
the  branch  to  a  sum  approximately  less  than 
the  latter  is  currently  earning.  There  are 
many  methods  whereby  this  can  be  done,  as 
has  been  proven  many  times.  It  is  vital, 
therefore,  that  the  investor  should  base  his 
entire  judgment  of  value  on  the  property 
itself,  regardless  of  the  parent  company, 
unless  indeed  the  latter  has  absolutely  as- 
sumed and  guaranteed  the  principal  and 
interest  of  the  bond. 


18  THE  AET   OP 

A  third  error  which  is  very  common  is  to 
assu^me  that  because  a  bond  is  listed  on  one 
or  more  of  the  stock  exchanges,  it  is  there- 
fore safer  or  in  better  standing  than  other- 
wise. Such  a  notion  is  entirely  unsound,  as 
there  are  far  more  bonds  of  the  highest 
grade  and  of  the  best  security  traded  in  on 
the  various  markets  outside  of  the  exchanges 
themselves.  The  chief  advantage  of  a 
security  being  listed  on  an  exchange  is  that 
it  thereby  secures  a  fixed  quotation,  but  the 
fact  of  its  being  listed  does  not  bear  upon 
its  safety  in  any  way.  While  it  is  true  that 
mxany  of  the  best  secured  bonds  and  stocks 
are  listed  on  the  exchanges,  it  is  also  true 
that  many  of  the  least  secure  are  listed  as 
well. 

In    contemplating    an    investment    in    a 


WISE  INVESTING  19 

given  security,  each  case  should  be  judged 
on  its  own  merits.  In  the  case  of  a  railroad 
bond,  it  is  not  the  question  of  whether  the 
issue  is  a  first  mortgage  or  a  blanket  mort- 
gage, but  whether  the  value  of  the  property 
on  which  it  is  secured  is  sufficiently  in  ex- 
cess of  the  amount  of  the  mortgage,  and 
whether  the  income  from  the  property  is 
sufficiently  in  excess  of  the  amount  required 
for  meeting  the  interest  on  the  bonds  and 
all  prior  obligations.  And  in  defining  value, 
we  mean,  of  course,  permanent  earning 
power,  for  it  is  the  permanent  or  growing 
earning  power  that  makes  the  value.  For 
instance,  the  New  York,  New  Haven  & 
Hartford  K.  E.  lines,  between  New  York 
and  Boston,  are  bonded  and  capitalized  for 
an  amount  far  in  excess  of  the  cost  of  re- 


20  THE  AET   OF 

placing  the  actual  movable  property  of  the 
company.  But  there  is  another  asset  be- 
sides its  rails  and  equipment  that  makes 
railroad  property  valuable.  This  is  its  lo- 
cation, its  exclusive  rights  of  way  and  ter- 
minal sites  or  privileges.  And  it  is  from 
these  latter  that  flow  its  chief  earning 
power.  The  500  odd  miles  of  railroad  on 
the  New  Jersey  Central  system  may  not 
represent  much  more  movable  property 
than  a  like  mileage  of  railroad  in  Mexico, 
and  they  may  not  have  originally  cost  much 
more  to  build.  But  the  vast  difference  in 
value  will  be  found  in  the  location,  in  the 
value  of  the  land,  a  value  which  has  been 
created  by  the  influx  or  growth  of  popula- 
tion. This  is  such  an  important  factor  that 
the  value  of  a  property  is  at  once  effected  if 


WISE  INVESTING  21 

a  tendency  towards  more  rapid  growth  ap- 
pears, while  it  at  once  falls  in  cases  where 
the  contrary  tendency  develops.* 

The  right  of  way  or  site  value  is  there- 
fore the  first  feature  to  bear  in  mind  in 
analyzing  the  permanent  earning  power  or 
value.  And  it  must  be  borne  in  mind  that 
it  is  the  permanent,  or  average,  earning 
power  rather  than  the  possible  temporary 
income  that  is  to  be  considered.  By  per- 
manency we  mean  a  matter  of  generations 
and  not  of  years.    Most  railroad  bonds  run 

*(This  effect  of  population  on  land  values 
and  on  all  sub-values — every  value  being 
subsidiary  to  land  value — is  brought  out 
most  clearly  and  scientifically  in  a  small 
l30ok  recently  issued  by  Eichard  M.  Hurd, 
President  of  the  Lawyer^s  Mortgage  Co., 
New  York,  entitled  "Principles  of  City 
Land  Values.^^) 


22  THE   AET   OF 

from  50  to  150  years  and  the  investor  must 
naturally  be  assured  that  there  will  not 
likely  be  a  real  depreciation  in  the  property, 
if  properly  maintained,  in  the  generations 
to  come.  His  first  thought  then  must  be  to 
ascertain  if  the  influx  of  population  around 
and  along  the  lines  of  the  property  is  likely 
to  continue  indefinitely,  and,  at  the  same 
time,  if  the  value  of  this  and  the  surround- 
ing land  is  such  that  the  creation  of  a  rival 
right  of  way  is  out  of  the  question.  In  other 
words,  his  fundamental  asset  (the  site) 
must  be  practically  exclusive,  for  it  is  the 
exclusiveness  that  gives  it  most  of  its  value. 
Having  assured  himself  as  to  this,  his 
next  care  will  be  to  see  that  the  probable 
average  earning  capacity  of  the  property  in 
the  poorest  times  is  well  in  excess  (50  per 


WISE  INVESTING  23 

cent,  at  least)  of  all  requirements  for 
interest  on  this  mortgage  and  all  prior 
charges,  as  well  as  for  full  maintenance  of 
the  property  in  every  respect.  The  in- 
vestigation of  this  phase  of  the  enterprise 
is  frequently  a  diflBcult  one,  as  reports  and 
income  accounts  are  so  often  onisleading  in 
arrangement  and  make-up  that  the  careless 
investor  is  sometimes  deceived  by  an  elab- 
orate display  of  figures  which  may  mean 
very  little.* 

*  (Every  investor  would  do  well  to  make 
himself  familiar  with  a  little  book  entitled 
^The  Anatomy  of  a  Eailroad  Eeport/^  by 
Thos.  F.  Woodlock,  editor  of  the  Wall 
Street  Journal.  It  is  published  in  the  well- 
known  Nelson's  IVall  Street  Library.  This 
little  book,  written  so  that  the  uninitiated 
as  well  as  the  expert  can  comprehend,  goes 
thoroughly  into  the  details  of  railroad  ac- 
counts and  reports.) 


24  THE  ART   OF 

But  even  though  the  investor  has  thor- 
oughly informed  himself  regarding  the 
above  characteristics,  there  are  many  other 
uncertainties  which  are  to  be  avoided  or 
overcome.  However,  if  he  has  been  careful 
to  see  that  the  conditions  described  above 
are  all  present  in  a  given  investment,  his 
chances  of  losing  his  money  will  be  reduced 
to  a  minimum.  If  on  the  other  hand,  he 
neglects  these  precautions,  and  adopts  other 
rules  for  analyzing  the  security  or  puts  his 
trust  in  the  ^^say-so^^  of  this  or  that  author- 
ity, then  he  stands  in  great  danger  of  sooner 
or  later  coming  to  grief,  as  will  be  shown  in 
the  following  pages. 

Many  years  ago  the  careless  legislation  of 
many  of  the  States  permitted  corporations 
to  decide  for  themselves  the  amounts  of 


WISE  INVESTING  25 

obligations  they  might  put  out,  and  there- 
fore it  was  no  wonder  that  the  privilege  was 
abused,  and  the  making  of  shares  and  bonds, 
the  latter  represented  to  be  amply  secured 
by  mortgage  liens,  were  carried  to  criminal 
excess.    One  illustration  will  suffice: 

"The  old  Arkansas  Central  Eailway  Com- 
pany, located  in  the  State  of  Arkansas, 
built  only  forty-eight  miles  of  its  pro- 
jected road.  The  road  was  of  narrow  guage, 
with  very  light  iron,  and  in  every  way 
cheaply  constructed.  It  cost  less  than  ten 
thousand  dollars  per  mile,  including  equip- 
ment. As  has  been  the  case  with  most  of 
companies  building  railways  in  new  coun- 
tries, help  in  its  behalf  was  asked  from  the 
communities  to  be  benefitted,  and  their 
bonds,  amounting  to  nearly  half  a  million 


or  TH£ 

VNIVER8ITY 


'J^lFORH\h^ 


26  THE   ART   OP 

dollars,  were  given  it  by  the  eounties,  cities, 
etc.  Under  a  statute  providing  for  aid  to 
railroads  when  their  beds  could  be  utilized 
for  levee  purposes,  the  company  got  $160,- 
000  of  State  bonds.  Under  another  statute 
it  got,  as  a  loan  from  the  State,  the  latter^s 
bonds  to  the  amount  of  $1,350,000,  which 
were  to  be  a  first  lien  upon  the  property. 
After  such  abundant  assistance,  it  would 
have  appeared  hardly  necessary  for  the 
company  to  put  out  obligations  of  its  own. 
However,  it  proceeded  to  market  and  issue 
its  own  debentures  to  the  amount  of 
$2,500,000,  of  which  $1,200,000  purported 
to  be  secured  by  first  mortgage,  a  repre- 
sentation that,  for  reasons  already  stated, 
was  not  correct.  In  addition  a  considerable 
amount    of    stock    certificates    was    issued. 


WISE  INVESTING  27 

Altogether,  nearly  $5,000,000  of  paper  was 
put  out  and  negotiated  on  the  basis  of  forty- 
eight  miles  of  narrow-guage  road.  But  this 
proved  to  be  insufficient.  The  road,  for 
non-payment  of  interest  on  its  bonds,  soon 
passed  into  the  hands  of  a  receiver,  who 
found  it  in  such  an  unfinished  state,  that, 
with  the  court^s  permission,  he  issued  a  con- 
siderable amount  of  his  own  certificates  to 
provide  for  necessary  repairs  and  better- 
ments. Then  the  road,  the  product  of  such 
an  outlay,  was  sold  at  public  auction  and 
brought  the  .magnificent  sum  of  $40,000, 
which  was  paid,  not  in  cash,  but  in  receiver's 
certificates  that  had  been  purchased  at  a 
great  discount  from  their  face!'' 

Twenty  or  thirty  years  ago,  nearly  all 
first-class    securities,  outside    of    "govern- 


28  THE  ART   OF 

ments^^  and  ^^municipals/^  were  steam  rail- 
road bonds  and  stocks.  But  we  now  have 
stocks  and  bonds  upon  the  market  repre- 
senting nearly  all  conceivable  kinds  of 
property,  industrial  and  manufacturing 
companies,  telegraphs,  telephones,  gas, 
electric  light  and  traction  companies, 
water-works,  bridges,  oil  and  gas  wells, 
factories  and  mills  of  every  description, 
patent  rights  of  all  sorts,  steamboat  lines, 
apartment  houses,  and  even  cemeteries. 
And  not  only  are  properties  of  many  kinds 
used  to  issue  bonds  on,  but  many  kinds  of 
bonds  are  often  issued  upon  the  same 
properties.  Thus  we  find  among  our  rail- 
roads and  other  corporations  not  only  first, 
second  and  third  mortgages,  but  income 
bonds,  debentures,  convertible  bonds,  con- 


WISE  INVESTING  29 

solidated  bonds,  redemption  bonds,  renewal 
bonds,  terminal  bonds,  divisional  bonds, 
sinking  fund  bonds,  ^^blanket-mortgage"" 
bonds,  collateral  trust  bonds,  equipment 
bonds,  and  bonds  ad  nauseam  until  they 
lap  and  overlap  in  seemingly  endless  com- 
plication. Not  that  merely,  but  one  issue 
of  bonds  is  sometimes  made  the  basis  of 
other  issues.  Indeed,  one  of  the  money- 
making  devices  of  the  time  is  the  formation 
of  companies  that  issue  their  bonds  on  the 
security  of  the  other  people^s  bonds  that 
they  have  purchased,  either  yielding  a 
higher  rate  of  interest  or  obtained  at  lower 
prices  than  they  expect  to  realize  for  their 
issues.  There  seems,  in  fact,  to  be  no 
limit  to  the  production  of  securities  that 
are  spread  before  the  capitalists.     There 


30  THE  AET   OF 

never  was  a  time  when  it  was  so  easy  to 
invest  money  and  to  lose  it.  Of  the  secur- 
ities that  are  offered  with  first  rate  recom- 
mendations, it  is  probable  that  about  one- 
third  are  actually  good,  one-third  have 
some  value,  and  one-third  are  practically 
worthless.  Hence  the  very  natural  infer- 
ence that  whatever  art  there  may  be  in  the 
matter  of  investing  is  to  be  exercised  chiefly 
in  the  avoidance  of  unworthy  offerings,  and 
it  is  to  that  point  that  a  profitable  dis- 
cussion of  the  subject  must  be  mainly 
directed. 

For  the  conditions  of  things  described, 
the  laws  of  some  of  our  States  in  giving 
corporations  almost  limitless  power  to  issue 
negotiable  paper,  as  well  as  in  permitting  all 
sorts   of   companies   to   incorporate   them- 


WISE  INVESTING  31 

selves,  are,  undoubtedly,  very  largely  to 
blame.  Our  banks  are  closely  watched  and 
very  properly  restrained  from  taking 
people^s  money  on  false  pretenses;  but  how 
much  better  is  it  for  industrial  and  other 
corporations  to  take  it  by  means  of  legalized 
fictitious  evidences  of  value?  Banks  are  by 
no  means  the  only  corporate  institutions 
that  need  watching.  One  of  the  reforms 
that  would  seem  to  be  very  much  demanded 
is  legislation  prohibitory  of  the  creation  by 
companies  existing  by  authority  of  law,  of 
stocks  and  securities  not  representing  cash 
actually  paid  into  their  treasuries,  or  pro- 
prietary interests  whose  values  are  to  be 
determined  by  disinterested  parties.  Penn- 
sylvania has  incorporated  substantially  such 
a  provision  in  her  constitution.     Her  ex- 


32  THE   AET   OP 

ample  should    be    followed    by    all    other 
commonwealths. 

But  the  security  behind  or  beneath  the 
debenture  or  other  paper  obligatory  is  not 
the  only  thing  to  be  looked  into  by  the  in- 
vestor. Even,  the  form  of  the  document 
may  be  important.  A  case  in  point,  inas- 
much as  it  shows  how  the  preparation  of  an 
undertaking  for  the  payment  of  money  may 
change  its  apparent  value,  would  seem  in 
this  connection  to  be  appropriately  quoted. 
Some  years  ago  certain  townships  in  the 
State  of  Missouri  were  desirous  of  aiding  the 
construction  of  railroads  with  their  credit. 
The  State  Legislature,  to  that  end,  passed 
an  act  authorizing  the  issue  and  sale  of 
bonds  obligatory  upon  them;  but  it  was 
stipulated — a  verv  singular  provision — that. 


WISE  INVESTING  33 

instead  of  being  put  out  by  the  townships, 
the  bonds  should  be  executed  by  the  offi- 
cials of  the  counties  in  which  they  were  lo- 
cated. Accordingly,  debentures  aggregating 
several  million  dollars  were  thus  prepared 
and  disposed  of.  The  bonds  bore  the  seals 
of  the  counties  and  the  signatures  of  their 
officials.  On  the  back  and  at  the  top  of  each 
signature  in  large  letters  were  the  words 
"county  bond.^^  The  instrument  began  with 
the  recital,  in  the  usual  form,  that  it  was 
issued  by  the  county,  but  farther  on,  and 
in  the  smallest  type  employed,  came  the 
statement  that  it  was  executed  for  and  in 
behalf  of  a  certain  township,  which  alone 
was  to  be  responsible  for  its  payment. 
These  bonds  were  extensively  advertised  as 
'^county  bonds/''  and  probably  in  most  in- 


34  THE   AET   OP 

stances,  certainly  in  many,  were  sold  as 
such,  and  it  was  not  until  purchasers  parted 
with  their  money,  that  they  discovered  that, 
instead  of  getting  the  papers  of  well  known 
and  wealthy  counties,  they  had  secured  only 
the  obligation  of  townships  they  had  never 
heard  of  before.  It  was  then  manifest 
enough  that  they  had  been  made  the  victims 
of  a  piece  of  very  sharp  and  very  shabby 
practice.  In  very  many  cases  the  buyers  of 
bonds  and  other  securities  learn,  when  it  is 
too  late,  that  their  purchases,  owing  to 
some  obscure  and  apparently  innocent  pass- 
age that  had  been  overlooked  or  dis- 
regarded, are  very  different  from  what  they 
thought  they  were  getting.  How  often 
have  careless  investors  that  supposed  that 
they    were    purchasing  undertakings    that 


WISE  INVESTING  35 

would  be  good  for  long  terms  of  years,  and 
probably  paid  premiums  to  obtain  them, 
ascertained  at  the  end  of  comparatively 
short  intervals  that  they  were  forced  to 
accept  in  payment  the  amounts  nominated 
in  the  bonds  in  consequence  of  unnoticed 
clauses  giving  their  makers  power  to  re- 
deem their  option?  The  lesson  of  such 
cases  is  obvious  enough.  It  is  that  no  one 
should  buy  a  moneyed  undertaking  without 
having  first  carefully  read  it.  This  may 
seem  like  an  unnecessary  warning;  but  in 
truth  it  is  a  most  material  one.  Thousands 
and  thousands  of  dollars  have  been  lost  by 
the  neglect  of  this  simple  precaution.  ^T 
didn^t  read  the  paper^^  is  the  explanation 
that  has  again  and  again  been  offered  when 
time  has  disclosed  a  different  investment 


36  THE   ART   OF 

from  the  one  intended  to  be  paid  for.  The 
fact  is  that  comparatively  few  unprofes- 
sional bond  and  stock  purchasers  ever  care- 
fully examine  the  instruments  they  acquire. 
They  look  at  the  headings,  those  parts  that 
are  in  big  letters,  and  take  the  rest  for 
granted.  It  is  a  most  unwise  practice. 
Unless  you  are  previously  familiar  with 
the  document  in  all  its  parts,  don^t  fail  to 
read  it  before  you  buy.  Read  it  all,  the 
little  type  as  well  as  the  big  type,  the  in- 
dorsements, the  coupons,  and  all.  Don^t 
take  somebod3r^s  else  word  for  it.  Examine 
the  seal,  the  signatures,  and  even  the  em- 
bellishments. Something  may  be  disclosed 
that  will  change  your  mind  and  save  your 
money. 

But  if  there  are  tricks  in  the  making  of 


WISE  INVESTING  37 

securities,  even  more  are  to  be  apprehended 
in  the  selling  of  them,  and  should  be 
guarded  against  with  corresponding  dili- 
gence. It  is  a  notable  fact  that  no  poor 
securities  are  ever  offered.  They  are  al- 
ways good  so  long  as  they  are  on  the  mar- 
ket. It  is  only  after  they  have  been  pur- 
chased that  they  prove  to  be  worthless. 
Interest  has  never  known  to  fail  on  bonds 
that  are  seeking  investors,  although  default 
has  sometimes  followed  very  closely  on  the 
sale  of  the  last  obligations.  Indeed,  it  is  no 
secret  that  interest  is  often  paid  out  of  the 
proceeds  of  the  bonds,  particularly  railroad 
issues,  the  purchasers  in  this  way  getting  a 
portion  of  their  own  money  back  while  the 
process  of  marketing  them  is  going  for- 
ward, although  such  a  thing  has  seldom 


38  THE   AET   OP 

been  known  to  happen  when  the  entire 
issue  was  disposed  of.  The  advertisements 
of  the  bond-sellers  are  sometimes  marvelous 
productions.  No  such  securities  as  they 
have  to  offer  have  ever  been  on  the  market 
before.  They  are  absolutely  safe;  they  pay 
extra  rates  of  interest,  etc.,  etc.  The  won- 
der is  that  with  so  much  capital  seeking  in- 
vestment, it  is  found  necessary  to  advertise 
such  perfections  at  all.  In  such  cases  it  is 
hardly  necessary  to  say  that  the  only  safe 
rule  for  investors  is  to  find  other  uses  for 
their  money,  however  strong  the  temptation 
may  be. 

A  common  expedient  of  bond-makers  and 
bond-merchants  is  to  fortify  their  issues 
with  the  favorable  opinions  of  eminent 
lawyers.    This  is  particularly  the  case  whe» 


WISE  INVESTING  39 

the  obligations  of  municipalities  or  of  com- 
panies that  are  dependent  upon  contracts 
with  municipalities  are  offered,  municipal- 
ities having  shown  an  unpleasant  dis- 
position to  go  back  on  their  undertakings. 
No  exceptions  can  be  taken  to  the  practice 
referred  to,  as  counsel  learned  in  the  law 
should  in  such  cases  always  be  consulted; 
but  the  writer  has  to  say  that  he  has  never 
yet  known  a  security  so  poor  that  a  lawyer^s 
opinion  could  not  be  had  to  back  it.  Such 
testimonials  should  be  taken  for  what  they 
are  worth,  and  no  more. 

When  so  many  seductive  baits  are  offered; 
so  many  nets  and  traps,  contrived  and  con- 
structed by  clever  brains  and  cunning 
fingers  are  spread  for  the  capture  of  those 
having  'money,  is  it  surprising  that  the  care- 


40  THE  AET   OF 

less  and  credulous  are  victimized,  and  even 
that  the  sagacious  and  prudent  should  some- 
time be  taken  in?  Nevertheless,  for  the 
losses  they  have  sustained,  investors  as  a 
rule,  have  themselves  chiefly  to  blame.  The 
mistakes  made,  in  nine  cases  out  of  ten, 
have  been  the  purchase  of  cheap  securities. 
The  hope  of  realizing  a  little  more  than  or- 
dinary interest,  by  buying  paper  at  a  dis- 
count, has  proved  to  be  the  rock  on  which 
unnumbered  capitalists  have  split.  In  ad- 
dition to  their  money^s  worth,  they  have 
endeavored  to  get  something  for  nothing, 
with  the  result  most  generally  of  getting 
nothing  for  something.  It  is  remarkable 
how  blind  are  people,  ordinarily  sagacious 
enough  to  make  money,  to  the  effect  that 
property  can  not  pay  a  revenue  beyond  its 


WISE  INVESTING  41 

producing  capacity.  For  instance,  how  can 
a  trolley  company,  whose  line  is  wholly  or 
mainly  bnilt  from  the  proceeds  of  mortgage 
bonds,  sell  them  at  a  heavy  discount,  be- 
sides allowing  large  commissions  for  the  sell- 
ing,  and  then  pay  both  this  interest  and 
dividends  on  stocks?  Or  how  can  a  poor 
agriculturist,  occupying  a  half-improved 
farm  out  on  the  frontier,  with  a  family  to 
support  and  grain  selling  barely  above  the 
cost  of  production,  pay  ten  or  twelve  per 
cent,  upon  the  capital  with  which  he  does 
business  ? 

By  what  rule  or  rules  is  the  investor  to 
govern  himself.  No  formula  can  guarantee 
him  absolute  safety.  One  thing,  however^ 
he  can  properly  count  upon,  viz.,  that  he 
must  expect  to  pay  a  fair  price  for  a  good 


42  THE   AET   OF 

security — one  that  will  return  him  no  more 
than  a  moderate  interest  on  his  money,  and 
if  he  wants  to  speculate  and  willing  to  take 
risks,  that  is  another  thing.  He  can  then 
look  for  bargains.  As  a  general  proposition 
it  can  be  asserted  that  the  day  for  high 
prices  for  money,  as  the  day  for  large 
profits  in  trade  or  manufacturing,  or  indeed, 
in  any  regularly  recognized  business  with 
us,  has  gone  by.  The  capitalist  who  sends 
his  money  into  a  new  section,  or  puts  it  into 
a  new  mechanical  process  or  a  new  con- 
structive enterprise,  may  or  may  not  make 
a  hit,  but  for  the  ordinary  and  conservative 
operator,  the  conditions  of  the  com'mercial 
and  financial  world  gives  warning  that  only 
small  profits  are  to  be  looked  for.  The  first 
and  main  thing  to  be  studied  is  safety.    And 


WISE  INVESTING  ,  43 

yet  there  is  such  a  thing  as  going  too  far  in 
the  matter  of  prudence.  The  investor  may 
pay  too  dearly  for  safety.  There  are  secur- 
ities which,  compared  with  others  that  are 
to  be  had,  sell  at  prices  much  above  their 
real  value.  The  reason  is  that  everybody 
knows  them  to  be  good,  and  investors  who 
don^t  want  to  take  the  trouble  to  investi- 
gate, or  are  afraid  to  trust  both  their  own 
judgments  and  the  counsels  of  their  friends, 
are  willing  to  pay  extra  prices  for  them. 
But  there  are  plenty  of  others  that  may  be 
had  at  lower  figures,  which  are  just  as  good. 
There  is  no  reason  in  the  world  why  the  in- 
vestor should  safely  invest  at  a  rate  that 
will  generally  yield  him  from  4  per  cent,  to 
5  per  cent,  interest,  and  be  as  secure  as  any 
property  can  be  under  human  supervision. 


44  THE   AET   OF 

As  heretofore  stated,  with  the  creation  of 
new  enterprises  and  properties,  and  the 
development  of  old  ones,  new  securities  are 
constantly  appearing  in  this  country  and  a 
fair  share  of  them  ought  to  be  good.  In- 
deed, our  securities  ought  to  be  the  best  in 
the  world.  The  sure  and  rapid  growth  of 
our  resources  supplies  a  reliable  support 
as  long  as  fair  intelligence  and  common 
honesty  attend  their  production.  The  only 
thing  is  to  choose  with  discretion,  so  many 
doubtful  and  even  fraudulent  issues  ap- 
pearing at  the  same  time;  but  no  more 
Judgment  is  really  demanded  than  in  pur- 
chasing lands  or  cattle. 

Two  common  and  often  fatal  mistakes 
should  be  avoided.  One  is  in  relying  solely 
upon  the  advise  of  another.     N"o  one  com- 


WISE  INVESTING  45 

petent  to  form  an  opinion  for  himself  should 
put  his  pecuniary  interests  unreservedly  in 
the  keeping  of  another.  Such  absolute  con- 
fidence invites  betrayal.  By  far  the  greater 
number  of  losses  to  investors  has  been  in 
securities  purchased  exclusively  on  the 
recommendation  of  interested  outside 
parties.  While  it  is  well  to  get  the  opinion 
of  a  reputable  broker,  the  purchaser  should 
investigate  and  decide  for  himself.  The 
other  mistake  is  to  uniformly  give  prefer- 
ence to  listed  securities.  As  pointed  out  at 
the  beginning  of  this  article,  many  persons 
seem  to  think  that  stocks  and  bonds  must 
have  a  value  if  they  are  quoted  at  some 
stock  exchange,  forgetting  how  many  fan- 
cies have  been  ballooned  until  they  have 
burst  at  such  places.    On  the  contrary  such 


\ 


46  THE  AET   OF 

a  position  is  likely  to  expose  them  to  mani- 
pulation for  purely  speculative  purposes. 
Stock-exchange  quotations  are  often  unsafe 
guides  to  buyers.  They  represent  not 
merely  the  value  of  the  property  but  also 
the  pitch  of  speculation  at  the  time.  When 
securities  are  converted  into  foot-balls  for 
gamblers  to  play  with,  they  are  pretty  cer- 
tain to  be  too  high  or  too  low.  The  main 
advantage  they  can  have  is  a  readier  mar- 
ketability in  case  of  an  urgent  need  to  sell; 
but  it  is  at  the  times  when  such  need  is 
likely  to  exist  that  they  are  pretty  certain 
to  be  at  the  lower  point.  No  speculative 
help  can  long  take  the  place  of  real  value. 
Securities,  in  the  long  run,  must  stand  up- 
on their  merits,  and  purchasers  have  merely 


WISE  INVESTING  47 

to  follow  business  principles  as  taught  by 
the  canons  of  common  sense. 

In   seeking  investments,   and   especially 

> 

long  time  investments,  there  are  several 
things  to  be  taken  into  account.  There  is 
not  only  the  question  of  the  kind  of  secu- 
rity to  purchase,  but  the  question  of  the 
time  of  purchase.  There  are  opportunities 
to  be  looked  for  as  well  as  pitfalls  to  be 
shunned.  It  is  during  periods  and  seasons 
of  depression,  when  securities  are  forced 
upon  the  market,  often  to  be  sacrificed — 
and  they  are  certain  to  come  if  waited  for 
long  enough — that  the  shrewd  investor 
finds  his  richest  harvest.  That,  however, 
can  not  be  said  of  the  ordinary  investor. 
He  usually  buys  when  securities  are  up  and 
confidence    is    unimpaired,    and    becoming 


48  THE   AET   OF 

frightened  as  the  market  values  go  down, 
sells  when  they  are  at  the  bottom,  and  holds 
his  money  to  reinvest  in  something  else  no 
better,  and  probably  not  as  good,  when  the 
tide  has  turned.  As  a  rule,  the  best  time 
to  invest  is  when  others  are  unloading.  In 
money  matters  it  is  never  safe  to  follow 
"the  crowd.^^  Nor  is  it  safe,  (which  is  lit- 
tle more  than  the  expression  of  the  same 
idea  in  another  form),  to  purchase  a  secur- 
ity when  it  is  on  the  "boom.^^  A  peculiar- 
ity of  our  money  market,  conservative  as 
it  is  popularly  supposed  to  be,  is  that  it  is 
constantly  changing  its  favorites.  Its  of- 
ferings come  in  waves.  Its  dealings  at  one 
time  may  be  chiefly  in  railways,  at  another 
in  municipal  obligations,  and  at  another  the 
excitem_ent  may  run  to  mining  shares  or 


WISE  INVESTING  49 

mortgages  on  ranches  and  real  estate.  For 
the  time  all  professional  brokers  and  bond 
and  share  sellers  urge  their  customers  to 
adopt  the  popular  issue,  of  which,  as  the 
result  of  the  increased  demand,  there  is 
almost  certain  to  be  excessive,  if  not  frau- 
dulent production.  To  yield  to  the  pres- 
sure of  such  a  time  is  always  risky.  Old 
and  tried  securities,  like  old  friends,  are 
likely  to  be  the  truest  and  best. 

One  thing  the  investor  would  do  well 
never  to  forget,  viz.,  that  there  are  always 
plenty  of  good  securities  in  the  market. 
No  one  with  money  need  ever  fear  that 
others  will  get  all  the  solid  investments, 
and,  in  the  apprehension  that  there  will 
not  be  enough  of  that  sort  to  go  around, 
put  up  with  an  inferior  article.     Don^t  let 


50  THE   AET   OF 

him  choose  what  is  not  altogether  satisfac- 
tory, under  the  impression  that  nothing 
else  as  good  or  better  will  offer.  If  he 
does  so,  sooner  or  later  he  will  regret  it. 
Something  good  always  comes  to  him  who 
waits  with  money  in  his  hand. 

Another  thing  of  a  precautionary  nature 
it  is  well  enough  for  the  investor  to  do,  and 
that  is  to  scatter  his  purchases.  The  old 
adage  about  putting  all  the  eggs  in  one 
basket  applies  with  peculiar  force  to  in- 
vestments. The  tendency  with  those  hav- 
ing but  moderate  sums  to  invest,  and 
who  need  to  be  the  most  circumspect, 
is  to  make  up  their  minds  in  favor  of  a 
single  line  of  securities  and  put  everything 
there.  Of  course,  a  failure  in  that  quarter 
is    particularly    disastrous.       The    writer 


WISE  INVESTING  51 

knew  a  party,  some  years  ago,  who  decided 
in  favor  of  municipal  obligations,  saying 
that  he  had  satisfied  himself  that,  on  the 
whole,  there  was  nothing  else  so  reliable. 
Accordingly  he  put  his  entire  available 
means  into  them.  But  practicing  abundant 
precaution,  as  he  supposed,  he  divided  his 
money  equally  among  municipal  issues  of 
Illinois,  Missouri  and  Kansas,  they  having 
the  most  paper  at  that  time  on  the  market. 
He  thought  he  was  certainly  safe  as  to  part. 
But  soon  after  a  wave  of  repudiation  senti- 
ment swept  over  that  part  of  the  county, 
and  every  one  of  his  bonds  were  left  in  de- 
fault. It  is  well  enough  to  scatter  in  kind 
as  well  as  in  locality. 


II.  * 

^^ew  York  has  no  more  entertaining 
public  exhibition  than  its  Stock  Exchange. 
It  is  one  of  the  show  places  of  the  city.  The 
visitor  who  for  the  first  time  looks  down 
from  a  gallery  upon  its  members  in  the  act 
of  transacting  business,  is  astonished  at  the 
apparent  confusion  he  witnesses.  He  seems 
to  have  entered  a  madhouse.  The  idea  that 
the  market  values  of  our  leading  securities 
should  be  determined  by  what  appears  to 
him  to  be  a  howling  mob  of  incurable  luna- 
tics, is  incomprehensible.     But  if  nothing 

*A  revision  of  the  original  article  by  John 
P.  Hume. 

53 


54  THE   AET   OF 

could  be  said  against  the  Exchange,  which 
is  simply  a  big  bazaar  for  the  sale  of  bonds 
and  stocks,  except  its  tumultuonsness  and 
the  seeming  lack  of  dignity  among  it& 
operators,  criticism  would  have  in  it  but  an 
indifferent  target  for  its  shafts.  Much 
graver  questions  grow  out  of  its  existence. 
Is  it  a  harmless  institution?  Is  it  a  public 
blessing  ?    Is  it  a  public  curse  ? 

As  a  great  central  mart  for  current 
securities,  it  is  certainly  of  vast  use. 
There  is  no  reason  why  bonds  and  shares 
should  not  be  publicly  dealt  in,  and  in  large 
quantities,  as  well  as  drygoods;  as  well  as 
com  and  cotton  and  beef  and  kitchen  vege- 
tables. If  the  Stock  Exchange  transactions 
were  restricted  to  the  bona-fide  buying  and 
selling  of  bonds  and  shares,  not  a  word 


WISE  INVESTING  55 

could  be  justly  said  against  it.  But  is  it  so 
restricted?  Unfortunately,  no.  A  main 
occupation  is  wagering  on  stocks;  many 
traders,  while  going  through  the  form  of 
buying  and  selling,  simply  bet  their  money 
upon  the  rise  or  fall  of  the  shares  they 
select,  as  they  would  upon  the  shiftings  of 
cards  or  dice.  The  Exchange,  while  doing 
a  large  legitimate  business,  is  also  an 
immense  speculating  establishment. 

Its  members  are  divided  into  two  classes — 
those  who  execute  commissions  for  others, 
and  those  who  deal  on  their  own  account. 
It  is  needless  to  say  that  among  the  latter 
are  the  boldest  and  sharpest  speculators  of 
the  day.  The  careers  of  these  men  can  be 
sketched  in  very  few  words.  Through  the 
exercise  of  superior  native  wits  or  the  acci- 


56  THE   AKT   OP 

dent  of  extraordinary  luck,  they  flourish 
marvelously  for  a  time;  but  only,  as  a  rule, 
to  lose  their  heads  and  their  balance  at  the 
last  and  go  down,  often  through  a  single 
disastrous  transaction — faster  than  they 
went  up.  There  are  exceptions.  Some 
flourish  to  the  end,  dying  generally  young — 
or  retiring  with  estates  unbroken.  But 
they  are  exceptions.  Wall  Street  is  a  place 
where  few  fortunes  are  made  and  a  great 
many  are  lost.  The  stories  of  its  magnifi- 
cent triumphs,  and  of  its  equally  magnifi- 
cent wrecks  read  like  tales  from  "The 
Arabian  Mghts^^;  some  of  them  like  pass- 
ages from  Dante^s  "Inferno.^^  Wall  Street 
has  had  its  suicides  by  the  dozen,  and  will 
have  plenty  more.  It  would  not  be  Wall 
Street  without  surprises.     And  yet  there  is 


WISE  INVESTING  57 

a  singular  sameness  in  the  ordinary  trader^s 
experience.  He  runs  an  exciting,  if  at  times 
a  rough  and  stormy,  career,  snatches  or 
seems  to  snatch  a  good  many  pleasures  by 
the  way,  makes  and  breaks  with  about  equal 
abandon,  wrecks  his  health  in  a  hurry,  dies 
early  and  suddenly,  and  then — well,  then, 
when  his  affairs  come  to  be  settled,  there 
are  often  found  large  blocks  of  utterly 
worthless  shares,  perhaps  a  fast  horse  or 
two,  possibly  a  yacht  or  automobile,  some 
costly  souvenirs,  a  few  solid  assets,  possibly 
heavy  debts,  or  even  actual  bankruptcy. 
Poor  fellow,  everybody  has  forgotten  all 
about  him! 

Of  the  ordinary  Wall  Street  speculator, 
however  clever  or  however  favored  for  a 
time,  it  is  perfectly  safe  to  say  that,  if  he 


58  THE   AET   OP 

lives  long  enough  and  sticks  to  the  busi- 
ness, he  will  finally  come  to  grief. 

But  how  about  Vanderbilt  pere,  who  was 
more  or  less  of  a  Wall  Street  operator  all 
his  many  days,  and  a  few  others  not  wholly 
dissimilar  if  less  conspicuous  examples  ? 

Ah!  that  brings  us  to  a  view  of  some  of 
the  interior  workings  of  the  New  York 
Stock  Exchange  that  the  public  has  little 
conception  of,  and  which  alone  will  give  a 
correct  understanding  of  its  real  character. 
The  popular  idea  is  that  the  Exchange  has 
upon  its  list,  to  be  dealt  in,  all,  or  nearly 
all,  prominent  stocks  and  bonds  of  acknowl- 
edged value,  impartially  selected  and  solely 
because  of  their  merits.  There  could  be  no 
greater  misconception.  We  look  there  in 
vain  for  the  shares  of  hundreds  of  high 


WISE  INVESTING  59 

grade  securities,  both  stocks  and  bonds, 
representing  corporations  of  the  highest 
standing,  and  largest  business  success; 
railroads,  industrials,  municipals;  corpora- 
tions whose  management  is  unexceptional, 
and  whose  securities  are  among  the  choicest 
investments.  But  if  there  is  a  company  with 
a  speculative  board  of  directors,  and  whose 
stock  has  been  watered  until  it  will  float  a 
respectable  navy,  its  shares  are  pretty  sure 
to  be  found  on  the  Exchangers  list.  Or  if 
there  is  a  company  that  is  absolutely  con- 
trolled and  directed  by  some  particularly 
active  and  conspicuous  manipulator,  its 
stock  may  be  looked  for  at  the  same  place. 
There  never  is,  apparently,  much  difficulty 
in  a  big  stock  operator  getting  his  issues 
upon  the  list.     What  has  been  the  result? 


60  THE   ART   OF 

Simply  that  the  much  genuine  rubbish  has 
been  unloaded  upon  the  public. 

Much,  but  not  too  much,  has  been  said  in 
condemnation  of  stock  watering;  of  the 
production  of  corporate  securities  repre- 
senting little  or  no  cash  investment,  and 
which  innocent  persons  are  led  to  purchase 
in  the  belief  that  they  are  getting  full 
values.  But  how  is  it  that  these  speculative 
issues  are  so  easily  marketed,  and  the  pro- 
ducers escape  all  responsibility  for  the  im- 
positions practiced?  Here  is  where  the 
Exchangers  "credit,^^  so  to  speak,  is  often 
used.  The  Exchange  is  made  the  conduit 
through  which  the  water  is  diverted  to  the 
investor's  pockets.  When  it  takes  the  stock 
upon  its  list,  the  Exchange  becomes  practi- 
cally the  seller,  supplying  the  machinery 


e  R  A  K  )r- 
Of  THt 

WISE  INVESTING  61 

and  means  of  transfer,  and  it  guarantees 
nothing.  Whoever  buys  at  its  board  is 
understood  to  take  all  risks,  no  matter  how 
much  deception  is  used.  He  may  be  vic- 
timized, but  he  has  no  redress.  The  Ex- 
change is  simply  the  medium  through 
which  the  over-issues  have  been  marketed. 
It  is  true,  of  course,  that  without  the  facil- 
ities of  the  Exchange,  many  of  the  stock- 
watering  frauds  which  have  become  histori- 
cal never  could  have  been  successfully  con- 
summated. 

Once  on  the  Exchangers  list,  seldom  is  a 
stock  so  worthless  that,  with  a  shrewd  ma- 
nipulator behind  it,  it  cannot  be  at  same 
time  unloaded.  The  process  has  been  a 
simple  one:  First  they  are  "washed^^ 
— singular    how    the    idea    of    water    runs 


62  THE   AET   OF 

through  all  stock  operations — or  pre- 
arranged sales  of  the  stock.  Outsiders  are 
then  told  that  there  is  money  in  it,  and  they 
begin  to  buy.  The  stock  is  duly  "sup- 
ported/^ an  indispensable  precaution — that 
is,  it  is  taken  at  quotation  prices  when 
offered  by  outside  owners,  and  so  up  and  up 
it  is  marked,  the  speculative  public  taking 
large  blocks  in  the  belief  that  it  is  going 
higher,  and  with  little  thought  of  its  actual 
value,  until  there  comes  a  time  when  the 
original  supply  has  been  exhausted,  and  the 
shares  are  no  longer  supported,  and  down, 
down  they  go.  The  real  value  of  the  stock 
has  little  to  do  with  its  negotiations.  In 
the  light  of  this  explanation,  there  is  no 
difficulty  in  comprehending  how  certain 
great  financial  magnates,  who  are  leading 


WISE  INVESTING  63 

operators  in  Wall  Street,  have  amassed  such 
colossal  fortunes.  They  have  been  stock- 
manufacturers  as  well  as  stock  dealers.  The 
New  York  Exchange  has  been  their  field  of 
operations,  their  market-place.  Through  it 
they  have  sold  their  wares.  Had  they,  like 
ordinary  speculators,  confined  themselves  to 
other  people^s  goods,  it  is  questionable 
whether  they  would  have  grown  exception- 
ally rich.  They  *might  have  become  poor, 
as  the  most  of  their  associates  have  done. 
But  when  with  consciences  conformable  to 
their  opportunities,  they  had  the  means  of 
selling  water  at  high  figures  and  in  practi- 
cally unlimited  quantities,  it  is  no  wonder 
that  their  fortunes  swelled  to  fabulous  pro- 
portions. 


64  THE   AKT   OF 

There  are  so  few  legitimate,  lawful,  and 
legally  controlled  exchanges  whereon  spec- 
ulation to  any  large  extent  is  conducted, 
that  only  the  leading  ones  need  be  named. 
The  New  York  Stock  Exchange  is  a  lawfully 
constituted  association  with  absolute  power 
to  make  and  enforce  its  own  rules  and 
regulations  upon  its  members.  An  applica- 
tion for  membership  in  it  is  scrutinized  with 
the  greatest  care,  and  the  applicant  must 
prove  himself  to  be  a  straightforward,  hon- 
est man  before  he  is  accepted.  Transac- 
tions between  members  are  in  most  instances 
verbal,  and  as  they  amount  to  millions 
of  dollars  in  value  daily,  confidence  in  each 
other  is  imperative.  It  is  a  rare  occurrence 
that  a  dispute  arises,  because  of  the  accu- 
racy and  care  exercised  in  their  transactions 


WISE  INVESTING  65 

with  each  other,  and,  as  a  rule,  the  same 
honesty  and  methods  are  extended  to  their 
relations  with  customers  who  are  not  mem- 
bers. The  legitimate  broker  is  always  so- 
licitous for  the  welfare  of  his  client,  from 
selfish  motives,  if  nothing  else.  A  cus- 
tomer who  imagines  he  has  not  been  fairly 
and  honestly  dealt  with  has  only  to  make 
complaint  to  the  secretary  of  the  Exchange, 
stating  his  grievance,  and  an  immediate  in- 
vestigation is  had,  followed  by  redress  and 
the  severe  discipline  of  the  offending  mem- 
ber, should  wrong-doing  be  discovered.  So 
high  is  the  character  of  Exchange  members 
that  no  hesitation  is  felt  by  the  public  in 
entrusting  to  the^r  custody  large  sums  of 
money.  What  is  true  of  the  New  York 
Stock  Exchange  is  also  true  of  the  Chicaero 


m  THE  AET   OF 

Board  of  Trade,  upon  which  is  handled  the 
vast  products  of  the  great  agricultural 
West.  The  public  should  be  warned 
against  speculative  transactions  with  any 
but  members  of  regular  exchanges  or  bro- 
kers having  permanent  connections  with 
them.  The  novice  is  oftentimes  unable 
to  discriminate  between  the  legitimate  and 
fraudulent,  but  there  is  an  infallible  test^ 
as  follows:  The  rules  of  the  New  York 
Stock  Exchange  and  Board  of  Trade  "oro- 
vide  that  customers  shall  receive  a  memo- 
randum  of  each  transaction  made,  which 
shall  show  the  date  upon  which  it  was  made,, 
the  price,  and  with  whom,  so  that  if  a  client 
has  any  doubt  about  it,  he  can  inquire  of 
the  party  named  on  the  memorandum 
whether  it  is  true  or  not,  or  he  can  ask  the 


WISE  INVESTING  67 

Secretary  of  the  Exchange  to  investigate 
for  him.  If  the  Secretary  cannot  confirm 
the  statements  in  the  memorandum,  it  can 
be  depended  upon  that  the  parties  who  are 
alleged  to  have  participated  in  the  tran- 
saction are  frauds,  masquerading  as  Stock 
Exchange  members,  with  whom  it  is  worse 
than  folly  to  entrust  business.  Hundreds 
of  them  exist  in  New  York  City  alone,  who 
live  as  barnacles  on  the  Exchange,  bringing 
ill-fame  and  discredit  on  an  honorable  busi- 
ness. 

It  is  a  common  thing  for  a  few  large 
speculators  to  combine  and  form  a  "pooF^ 
to  advance  some  specific  stock  or  group  of 
stocks,  the  idea  being  that  ^^in  union  there 
is  strength.^^  In  such  combinations  some 
one  of  the  members  is  usually  designated  as 


68  THE   AET   OF 

the  "manager/^  who  gives  all  orders  for 
purchase  and  sale.  The  business  is  gen- 
erally given  to  a  number  of  commission 
houses  who  transact  a  miscellaneous  busi- 
ness, in  order  to  keei)  the  transaction  under 
cover  as  much  as  possible,  because  publicity 
would  probably  defeat  the  plan.  The 
stocks  subject  to  the  manipulation  are  made 
to  look  weak  and  strong  alternately — ^weak 
in  order  to  induce  ^^short^^  selling,  when  the 
^^pooF^  is  a  free  buyer,  and  strong  to  induce 
"outside^^  buying  when  the  "pooP^  is  a  seller. 
That  sort  of  see-saw  manipulation  is  con- 
tinued, making  the  stocks  active  and  at- 
tractive to  the  public,  until  many  thousand 
shares  have  been  accumulated.  In  the  mean- 
time the  most  favorable  rumors  and  reports 
relating  to  the  value  of  said  stocks  are  care- 


WISE  INVESTING  69 

fully  put  forth  through  market  letters, 
newspapers,  and  other  well-known  mediums. 
This  is  done  for  the  purpose  of  inducing  the 
public  to  buy,  on  the  perfectly  correct 
theory  that  the  public  does  buy  when  it  is 
asked  to,  providing  the  price  is  high  and 
advancing,  and  especially  if  it  is  informed 
that  ^'^strong  parties  are  behind  the  deaF^; 
when  the  public  ^^comes  in^^  good  and 
strong,  influenced  by  predictions  of  a  fur- 
ther great  advance,  it  gets  the  stock.  The 
^^strong^^  parties  have  ^^unloaded^^ — the 
public  is  ^^holding  the  bag,^^  and  wonder 
what  is  the  'matter. 

Eecently  a  new  form  of  advertising  for 
"Lambs^^  has  become  popular,  which  re- 
quires no  capital  beyond  the  sum  needed  for 
newspaper  bills.     The  advertisement  usual- 


70  THE  ART   OP 

ly  states  that  for  a  small  sum,  paid  "weekly^^ 
or  "monthly/^  the  subscriber  will  receive 
"sure  tips^^  on  the  market^s  movements,  and 
that  in  consideration  of  one-quarter  or  one- 
half  of  the  profits  secured,  the  self-styled 
"Advisory  Brokers^^  will  handle  the  "deals^^ 
for  the  "Lambs^^  who  don^t  know  how  to  da 
it  for  themselves.  These  "brokers^^  have  a. 
"sure  thing,^^  as  they  always  advise  one  per- 
son to  operate  for  the  decline  and  another 
for  an  advance.  They  are  certain  to  make 
money  in  one  of  the  transactions.  It  is 
marvellous  what  a  number  of  otherwise 
cautious,  careful  people  are  victimized 
yearly  in  these  shady  operations. 

But  the  Exchange  is  nevertheless  very 
useful  and  necessary  in  supplying  quotable 
values  and  furnishing  a  ready  market  for 


WISE  INVESTING  71 

all  classes  of  securities.  This  important 
function  of  the  Exchange  is  well  brought 
out  in  a  paragraph  taken  from  Chas.  A. 
Conant^s  recently  published  book,  ^^Wall 
Street  and  the  Country/^  Says  Mr.  Conant : 
"One  of  the  most  persistent  of  the  hallu- 
cinations which  prevail  among  people  other- 
wise apparently  lucid  and  well  informed,  is 
the  conception  that  operations  on  stock  and 
produce  exchanges  are  pure  gambling.  A 
moment^s  reflection,  it  would  seem,  might 
convince  such  persons  that  a  function  which 
occupies  so  important  a  place  in  the  mech- 
anism of  modern  business  must  be  a  useful 
and  necessary  part  of  that  mechanism;  but 
reflection  seems  to  have  little  part  in  the 
intellectual  equipment  of  the  assailants  of 
organized  markets.     Only  recently  I  picked 


72  THE   AET   OF 

up  a  book  purporting  to  treat  of  the  sub- 
ject of  ethics,  and  found  this  remarkable 
passage : 

^If,  instead  of  betting  on  something  so 
small  as  falling  dice,  one  bets  on  the  rise 
and  fall  of  stocks  or  on  the  price  which 
wheat  will  reach  some  months  hence,  and 
if  by  such  betting  one  corners  the  commu- 
nity in  an  article  essential  to  its  welfare, 
throwing  a  continent  into  confusion,  the 
law  will  pay  not  the  slightest  attention.  A 
gambling  house  for  these  larger  purposes 
may  be  built  conspicuously  in  any  city,  the 
sign  ^^Stock  Exchange^^  be  set  over  its  door, 
influential  men  aDDointed  its  oflBcers,  and 
the  law  will  protect  it  and  them  as  it  does 
the  churches.  How  infamous  to  forbid 
gambling  on  a  small  scale  and  almost  to 


WISE  INVESTING  73 

encourage  it  on  a  large  !^ 

"The  writer  who  undertook  to  discuss  the 
stock  exchange  in  that  manner  in  a  book  on 
ethics,  might  well  have  devoted  himself  less 
earnestly  to  the  smaller  refinements  of 
ethical  definition  and  reverted  to  the  an- 
cient maxim,  ^Thou  shalt  not  bear  false 
witness  against  thy  neighbor/  What  he 
says  is  a  hodgepodge  of  misconceptions.  If 
it  be  true  that  betting  on  the  rise  and  fall 
of  stocks  be  gambling,  as  it  undoubtedly  is, 
then  what  follows  has  no  relation  to  the 
first  suggestion.  To  one  having  any  knowl- 
edge of  the  subject-matter,  the  two  parts  of 
the  first  sentence  are  inconsistent  with  each 
other  and  mutually  destructive.  Pure  bet- 
ting is  done  in  bucket-shops,  is  of  no  use  to 
the  community,  is  destructive  to  the  morals 


U  THE   AKT   OF 

and  pockets  of  young  men,  and  cannot  be 
too  severely  censured.  But  such  betting  is 
not  carried  on  in  buildings  bearing  the  sign 
^Stock  Exchange/  It  has  nothing  to  do 
with  the  legitimate  processes  of  the  ex- 
changes. Moreover,  one  cannot  corner  the 
community  on  any  ^article  essential  to  its 
welfare^  by  betting  in  bucket-shops.  He 
may  perhaps  do  it  within  certain  limits  by 
actual  transactions  on  the  produce  ex- 
changes, because  they  involve  the  right  to 
demand  delivery.  If  it  were  true,  however, 
that  no  such  deliveries  were  contemplated 
or  could  be  onade,  as  is  usually  the  case  in 
bucket-shop  gambling,  it  would  no  more  be 
possible  to  corner  the  supply  of  wheat  by 
betting  on  its  future  price  than  it  is  possible 
for  a  politician  to  carry  the  election  his 


WISE  INVESTING  75 

way  by  laying  heavy  odds  on  his  candidate. 
His  bets  would  not  make  votes,  and  merely 
betting  on  the  prices  of  the  commodity 
would  not  influence  the  supply. 

^^The  fact  that  such  confusion  of  ideas 
prevails,  and  that  the  stock  and  produce 
exchanges  continue  to  be  looked  upon  by 
many  good  people  as  a  sort  of  adjunct  of 
Monte  Carlo,  justifies  an  occasional  re- 
statement of  the  essential  part  which  these 
exchanges  play  in  the 'mechanism  of  business. 
To  take  the  subject  up  from  an  elementary 
standpoint,  it  is  well  to  say  a  word  regard- 
ing the  function  of  stock  companies.  The 
discovery  was  made  long  before  our  time 
that  a  piece  of  property  or  a  new  enterprise 
could  be  given  mobility  and  divisibility  by 
putting    the    title    to    its    ownership    into 


76  THE   AET   OF 

transferrable  shares.  The  creation  of 
share  companies  enables  the  small  capital 
of  individuals  to  be  gathered  into  large 
fnnds  necessary  to  build  factories  and  rail- 
ways. It  divides  the  risk  of  an  undertak- 
ing among  many  persons,  and  places  the 
enterprise  beyond  the  accidents  of  a  single 
human  existence  by  giving  it  a  ficticious 
body  dowered  by  law  with  perpetual  lif  e.^^ 

But  in  addition  to  being  a  balance-wheel 
to  the  business  of  the  country,  Stock  Ex- 
change speculation  is  often  a  disturbing 
factor.  It  does  not  even  furnish  trust- 
worthy news.  Nowhere  is  it  so  difficult  to 
get  reliable  intelligence  concerning  any 
stock  dealt  in  there,  as  in  Wall  Street. 
The  inventiveness  of  the  speculative  broker 
is  something  marvelous.     He  can  ruin  the 


WISE  INVESTING  77 

country  one  hour  and  save  it  the  next.  He 
can  blight  the  crops  of  a  whole  section^  or 
he  can  fill  the  land  with  abundance.  He 
can  make  war  or  he  can  make  peace,  exactly 
as  his  monetary  interest  demands.  Kumor- 
mongering  seems  to  be  a  part  of  his  trade. 
He  is  the  chief  of  liars.  Perhaps  he  is  the 
exception  rather  than  the  rule  among  his 
fellows — it  is  to  be  hoped  that  he  is — but 
he  is  a  pretty  numerous  exception,  for  all 
that!  What  is  the  consequence?  Simply 
that  when  a  financial  storm  threatens  the 
country,  the  Exchange  is  almost  certain  to 
be  the  center  of  disturbance.  No  other 
institution  is  so  sensitive.  It  exaggerates 
all  the  symptoms  of  trouble.  It  sends  out 
its  alarming  reports  as  the  storm-cloud 
sends  out  its  lightnings.     Looking  at  it  as 


78  THE   ART   OF 

the  barometer  of  values,  the  timid  naturally 
conclude  that  everything  is  lost,  and  thus 
the  evil  is  unduly  magnified.  Wall  Street 
is  as  much  the  natural  field  for  panics  as 
the  prairie  is  for  tornadoes. 

While  the  Exchange  has  been  of  ad- 
vantage to  the  business  interests  of  the 
country,  there  are  many  who  have  had 
dealings  with  it  who  would  not  testify  in 
its  favor.  Of  the  thousands  and  thousands 
who  have  visited  it  in  person  or  by  proxy, 
and  done  a  little  business  with  it,  not  many 
are  ready  to  rise  up  and  call  it  blessed,  ex- 
cept in  a  qualified  sense.  If  all  were  to 
give  their  experiences,  what  would  the  ver- 
dict be?  It  is  to  be  apprehended  that  the 
evidence  of  a  very  decided  majority  would 
not  be  flattering  to  Wall  Street^s  specula- 


WISE  INVESTING  79 

tive  methods;  that  their  testimony  would 
be  that  they  had  found  it  easier  to  lose 
money  than  to  make  it. 

The  man  who  says  he  ^^never  speculates 
in  stocks,  but  buys  only  what  he  can  pay 
f or/^  is  a  sufferer  as  frequently  as  the  man 
who  buys  on  a  "margin/^  He  is  generally 
a  "sticker^^ — one  who  never  "lets  go/^  He 
buys  a  security  that  he  believes  in,  and  so 
strong  is  his  confidence  that  he  will  not 
accept  a  generous  profit  if  it  is  offered  him, 
and  he  is  still  more  tenacious  when  a  loss 
is  growing.  His  temperament  will  not  ad- 
mit of  the  possibility  of  an  eventual  loss, 
but  the  rule  with  exceptions  is  that  he  will 
finally  take  his  loss  when  it  has  reached  its 
greatest  proportions.  Securities  amount- 
ing to  hundreds  of  •millions  of  dollars  ha-/e 


80  THE   AET   OF 

been  carried  by  people  who  ^^never  specu- 
late/^ through  the  depression  of  the  past 
four  years.  They  have  paid  interest  on 
money  borrowed,  paid  assessments  undor 
re-organization  schemes,  and  still  a  loss 
stares  them  in  the  face. 


III. 

The  growth  of  corporate  industry  in  this 
country  during  the  past  six  years  is  in  many 
respects  the  most  remarkable  phenomenon 
of  modern  times.  In  every  conceivable  line 
of  human  activity — commercial,  financial, 
manufacturing,  transportation,  public  ser- 
vice— ^great  and  extensive  development 
has  taken  place. 

And,  consistently  enough,  this  develop- 
ment has  proceeded  along  certain  definite 
lines.  The  period  from  1897  to  date  might 
be  looked  upon  as  the  transition  period  of 
the  world^s — and  particularly  Americans — 

81 


82  THE   AET   OF 

industrial  forces.  It  has  been  a  time  of 
business  change  chiefly — ^not  merely  a 
growth  in  aggregate  volume  or  output  — 
but  a  change  in  method  and  in  scope.  In 
other  words,  it  has  been  the  period  of  evo- 
lution from  small  to  large  methods;  from 
limited  to  unlimited  capacity;  from  com- 
petitive to  co-operative  means  of  production 
and  distribution. 

With  this  evolution  of  the  industrial  or- 
ganism, numerous  changes  have  taken  place 
in  the  ideas,  wishes  and  ambitions  of  busi- 
ness and  professional  men,  and,  in  fact,  of 
workers  of  every  kind;  many  customs  and 
habits  in  commercial  and  industrial  fields 
have  grown  obsolete  and  have  been  super- 
seded by  others;  new  industries  have  been 
created  and  avenues  opened  for  the  produc- 


WISE  INVESTING  83 

tion  of  wealth  which  were  not  dreamed  of 
a  few  years  back.  These  changes  in  the 
ways  of  wealth  production  have  reached 
every  walk  of  life,  influenced  all  classes  of 
people,  and  must  be  considered  and  their 
influence  weighed  by  every  business  man. 
But  while  these  changes  in  industrial  life 
have  been  uniformly  salutary  in  some  re- 
spects, they  have  not  consistently  been  so 
in  others,  and  have  given  rise  to  many 
problems,  both  theoretical  and  practical, 
the  solution  of  which  is  vital  to  the  entire 
community. 

Naturally  enough,  one  class  which  is  most 
vitally  interested  in  the  development  of  in- 
dustrial matters  and  methods  is  that  known 
as  the  "investor  class.^^  It  is  the  investor 
whose  capital  is  always  at  stake,  and  who 


84  THE   AET   OF 

is  therefor  most  deeply  involved  in  the 
success  or  failure  of  the  enterprise.  His 
class,  too,  is  one  which  has  naturally 
evolved  from  a  small  portion  of  the  com- 
munity to  a  very  large  one,  as,  since  all 
undertakings  of  importance  are  now  con- 
ducted on  the  corporate  plan,  he  has  neces- 
sarily become  a  stock  or  bond-holder,  where 
formerly  he  was  a  partner,  or,  as  in  many 
cases,  sole  owner. 

Wow,  this  growth  of  the  investor  class, 
and  of  the  investor's  field  has  made  it  neces- 
sary that  the  details  of  all  large  businesses 
be  given  greater  publicity  than  ever  before; 
that  the  fullest  knowledge  possible  be  given 
the  public  regarding  the  ability  and  per- 
sonnel of  the  corporation's  management; 
its  methods;  its  situation;  its  advantages; 


WISE  INVESTING  85 

its  political  relations;  its  financial  and  com- 
mercial status,  income,  etc.  And  here  is 
an  instance  of  where  the  new  industrial  re- 
gime has  created  a  new  industry — that  of 
the  financial  or  corporation  statistician. 
It  has  made  this  new  vocation  necessary 
and  important,  just  as  it  has  brought  into 
being  other  business  specialists — the  under- 
writers, the  men  of  affairs,  and  the  so-called 
^^generals  of  industry.^^  Without  the  men 
of  affairs  and  industrial  experts  generally, 
no  large  modern  enterprise  could  be  suc- 
cessful; and  it  is  equally  true  that  without 
some  economical  method  of  furnishing  to 
the  public  accurate  details  and  statistics  of 
the  many  thousand  public  corporations,  the 
investor,  banker  or  broker  would  forever  be 
^t  sea. 


86  THE   ART   OF 

Following  these  logical  lines,  a  natural 
and  practical  development  of  the  past  few 
years  has  been  the  Bureau  of  Corporation 
Statistics,  located  at  35  Nassau  Street,  New 
York  City.  This  Bureau  furnishes  general 
and  special  information  regarding  the  en- 
tire corporation  field,  and  covers  all  lines  of 
industry — Steam  and  Electric  Railroad,^ 
Industrial,  Gas,  Electric  Light,  Mining,. 
Telephone  and  Telegraph,  Banks,  Trust 
Companies — in  fact,  all  corporate  under- 
takings and  enterprises. 

A  brief  history  of  this  Bureau,  which  ha& 
within  a  remarkably  short  period  become 
one  of  the  important  adjuncts  of  the  finan- 
cial and  investing  world,  may  not  be  amiss. 

Early  in  1899,  Mr.  John  Moody,  who  had 
been  for  a  number  of  years  operating  a 


WISE  INVESTING  87 

statistical  bureau  for  the  well-known  bank- 
ing house  of  Spencer  Trask  &  Co.,  conceived 
the  idea  of  putting  in  operation  a  bureau 
of  financial  statistics  which  could  be  made 
accessible  not  merely  to  a  private  banking 
house  and  its  clients,  but  to  the  general 
investing  public  also.  Well  knowing  the 
difficulty,  through  an  extended  experience, 
of  securing  accurate  and  reliable  informa- 
tion on  investment  securities  in  general,  he 
felt  confident  that  the  field  would  prove  a 
large  and  growing  one. 

And  he  was  not  mistaken.  In  1900, 
jointly  with  several  associates,  he  formed  a 
company  with  liberal  capital  and  advan- 
tageous connections,  to  develop  a  Bureau  of 
Corporation  Statistics  along  the  lines  here 
indicated. 


88  THE   AET   OF 

The  Bureau  of  Corporation  Statistics  has 
grown  with  remarkable  rapidity,  both  as 
regards  its  accumulation  of  information  and 
its  general  patronage.  It  now  embraces  a 
financial  library  of  thousands  of  volumes, 
and  current  data  (increasing  daily  and  sys- 
tematically revised)  regarding  American 
and  foreign  corporations  and  investments 
of  every  kind  and  nature. 

Each  annual  subscriber  is  entitled  to  the 
full  use  of  the  financial  statistical  files,  and 
to  make  special  inquires  whenever  he  may 
desire  to  do  so,  either  by  personal  call,  mail 
or  telephone.  Eeports  are  furnished  to 
annual  subscribers  and  by  the  single  report, 
regarding  all  corporations  and  investment 
securities.  The  charges  are  moderate  in 
all  cases.     The  reports  furnished  are  not 


WISE  INVESTING  89 

influenced  or  "inspired^^  and  have  no  bear- 
ing on  Wall  Street  "tips^^  or  "gossip/^  In 
brief,  it  is  a  bureau  of  legitimate  informa- 
tion for  investors,  bankers,  corporation 
lawyers,  etc.  In  some  respects  it  can  be 
likened  to  the  mercantile  agency,  the  vital 
distinction  being,  however,  that  it  does  not 
supply  credit  ratings,  but  furnishes  facts 
and  figures  regarding  corporate  enterprises 
of  every  nature  from  the  investor's  stand- 
point purely.  The  office  of  the  Bureau  of 
Corporation  Statistics  is  at  35  Nassau 
street.  New  York,  where  the  manager, 
Charles  F.  Bridge,  is  always  glad  to  receive 
visitors,  and  show  them  the  Bureau  in 
operation. 


A  Great  Financial  Reference  Book 

From  Leslie's  Weekly 

These  are  the  days  of  innumerable  cor- 
porations^ and  it  is  frequently  essential  for 
the  banker^  the  broker,  the  corporation 
lawyer,  the  investor,  and  even  the  mer- 
chant and  manufacturer,  to  secure  quick 
knowledge  of  the  real  character  and  stand- 
ing of  one  or  other  of  the  capitalized  com- 
binations. For  this  purpose,  perhaps  the 
most  comprehensive  reference-book  in  the 
world  is  "Moody^s  Manual  of  Corporation 
Securities,^^  issued  annually  by  the 
Moody  Publishing  Company,  of  New  York. 
This  is   a  volume   of  nearly   2,500   pages, 

91 


92  THE   AET   OF 

which  contains  statements  regarding  more 
than  eleven  thousand  corporations^  giving 
statistics  as  to  the  property,  the  capitali- 
zation, the  bonded  debt,  the  dividends,  the 
financial  condition  and  earnings,  the  offices, 
plants,  etc.,  of  each  corporation.  Detailed 
and  accurate  information,  indicating  the 
degree  of  their  strength  and  reliability,  is 
imparted  concerning  steam  railroad,  gas 
and  electric  light,  electric  traction,  water, 
telegraph,  telephone  and  cable,  industrial, 
commercial,  mining,  and  oil  companies, 
banks  and  trust  companies  in  the  United 
States  and  Canada,  all  this  being  of  utmost 
value  of  those  concerned.  Each  year  shows 
a  marked  advance  on  even  the  excellent 
previous  editions,  covering  new  matters 
not  touched  upon  in  previous  issues.     The 


WISE  INVESTING  93 

contents  are  divided  into  eight  sections, 
and  a  complete  general  alphabetical  index 
and  a  special  index,  arranged  by  cities, 
render  the  volume  a  perfect  financial  refer- 
ence publication.  No  other  work  of  the 
kind  covers  so  much  ground  or  can  be  so 
useful  to  those  who  need  to  consult  such  a 
manual.  The  book  is  attractively  printed 
and  bound.  Price  in  cloth,  $10;  in  full 
flexible  leather,  $12. 


^^A  man^s  learning  dies  with  him;  even 
his  virtues  fade  out  of  remembrance,  but 
the  dividends  on  the  stocks  he  bequeaths 
to  his  children  live  and  keep  his  memory 
green/^ — Holmes 


^  or  Tv;c 
of 


J^ALiro 


^^pH^ 


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